It is not only the fat cats who will suffer

THEY'RE fat cats aren't they? The rich who have managed to build up a pension fund of more than £1.4m deserve to pay a bit more tax. And, after all, we're only talking about a few thousand of the very highest earners.

This is clearly the thinking behind Gordon Brown's decision to impose windfall taxes of 33% on pension savings above a certain level.

But, not for the first time with this Government's dabbling in the world of pensions, Brown has got it wrong.

First, it now appears that possibly 100,000 people rather than a mere 5,000 could be stung by the new levy. Analysts calculate that employees earning about £100,000 a year could be affected.

Second, the very highest earners will almost certainly be shielded against the impact of the tax. Companies already top up pension payments for executives to help them avoid the present tax disadvantages.

It is very likely that top bosses will be offered similar protection against the Treasury's attempts to dip into the large pension pots they are amassing.

More important, though, what message does the launch of this new wealth tax give to others in the workforce, thems the Government consistently urges to save for their old age? And what response does Brown expect from the ambitious youngsters and entrepreneurs on whom he pins so many hopes for the future vibrancy of the economy?

The thirtysomething marketing manager at Sainsbury, the scientist beavering away in the research labs at GlaxoSmithKline, the graduates with a burning drive to launch their own businesses. These people certainly will not see an eventual salary of £100,000 as beyond their grasp. Nor should they.

But while they shoot for high earnings they will almost certainly think twice about saving as they go for a pension that is at risk of being taxed at about 60%.

And once a tax is introduced, ostensibly on the very few, it has the nasty habit of gradually being extended to the many. The 40% top tax rate affected 1.7m when it was introduced by Nigel Lawson in 1990. This year more than three million will pay.

By the time today's thirtysomethings reach retirement, it is a racing certainty that the size of the individual pension fund vulnerable to extra tax will be very much smaller, taking account of inflation, and people effectively on lower salaries will fall into the tax net. However, if this pernicious levy proceeds unaltered, at least today's young workers will know what they are in for.

There are clearly thousands heading towards retirement who are less fortunate. They will have saved into a pension scheme all their working lives - probably the most long term financial decision of all - only to find that the Government swipes great chunks of their money in a shortterm tax raid.

The proposal in the Green Paper is a cynical assault that has all the potential to backfire spectacularly by undermining the culture for saving which this Government says it wants to encourage. The plan should be scrapped and the Government should think again.

WHEN Sir Adrian Cadbury set the corporate governance bandwagon rolling more than a decade ago, the big worry was that small companies would be neither able nor willing to comply.

The process of appointing independent non-executive directors would be too onerous and expensive for them to contemplate.

Now, though, with all the ballyhoo about the latest suggestions for boardroom overhaul from Derek Higgs, it is remarkable that the biggest outcry is coming from the upper echelons of Britain's 100 largest companies. It is here that we frequently find the chairman who was previously the chief executive. Just look how Sainsbury's is planning to bump Sir Peter Davis upstairs.

It is also here that the chairman heads the nominations committee and so has a firm grip over who can and who cannot join his board.

And it is here that chairmen are most worried they will be undermined by the appointment of a senior independent director to whom shareholders can turn if their usual lines of communication fail.

Because smaller companies have been forced to run harder to keep up with corporate governance changes, they are now far more likely to comply with the requirement for boardroom diversity which Higgs is recommending. They are not complaining.

The outcry from FTSE 100 chairmen, co-ordinated by the CBI, illustrates nothing so much as how successful top bosses have been at withstanding moves to introduce checks and balances that could dilute their boardroom power.